June 23, 2020 by Research Team
Critical illness (CI) insurance is a long-term insurance policy to cover specific serious illnesses listed within a policy.
If diagnosed with a serious illness, the insurance company will provide single lump-sum payment.
The payment is made when you survive a certain period (typically a month) after confirmation of the diagnosis.
You can buy a CI cover either for yourself or jointly with your spouse.
What is covered?
The number of critical illnesses varies from insurer to insurer. Most insurance companies cover:
What is excluded?
What are the benefits of CI plan?
CI benefit irrespective of hospitalization
Hospitalization is not required because diagnosis is enough to get CI benefits.
On submitting medical documents confirming diagnosis, you will receive a single lump sum amount.
Financial support
You can spend the money to pay for cost of your treatment, recuperation expense, clear any debts, pay your rent or mortgage, pay for medical bills or to adapt your home to your particular needs.
Tax-free payout
The one time lump sum amount paid on diagnosis of a serious illness is tax-free.
Protection against untimely death
In case of an untimely death, your nominee will receive the lump sum payout. However, this amount is paid only when you survive the 30 day period after diagnosis of an illness.
What to consider before you buy a CI plan?
CI plan does not cover hospitalization costs. The lump sum paid is as per your policy amount.
So you will still require a health insurance plan to meet these expenses.
Also, the policy has well-defined terms and conditions for diagnosis of an illness.
For instance, you need to undergo specific tests, by specific physician to confirm diagnosis of the illness.
Payout is made only for the specific illness (as per the severity mentioned in the policy). There are many illnesses which are excluded.
Do consult your financial advisor to help you understand the policy details before buying a critical illness plan.